Ross Martin Tax: SME Tax Update 6 March 2025

Hello,

This week we bring news of the planned closure of the HMRC/Companies House joint online filing service for companies. We explore HMRC’s new consultation on the proposed changes to Agricultural Property Relief (APR) and Business Property Relief (BPR), and, as the end of the current tax year draws near, we consider last-minute tax planning opportunities for 2024-25.

SME tax news 12

Since last year’s Autumn Budget, there has been much discussion on what the proposed changes to APR and BPR from April 2026 will mean for many business owners. At the time of the original announcement, a technical consultation on the application of the policy to trusts was promised. That consultation has now been published, and it provides greater detail of how the new rules are expected to operate. Our analysis can be found linked below.

Research & Development (R&D) continues to be another hot topic. In December 2024, HMRC confirmed that it would not appeal the decisions in Collins Construction Limited and Stage One Creative Services Limited. As a result, HMRC has now updated its guidance on subsidised and contracted-out expenditure for the SME R&D scheme.

While HMRC's updated guidance is not identical to the 2021 approach, it is very similar and offers greater clarity. HMRC have written to companies it believes are impacted by the above tribunal decisions, seeking to close open enquiries by 30 June 2025 where possible.

Finally, be sure to read our year-end tax planning guides for private clients and business owners in Editor's Choice, as well as our summary of the optimum director/shareholder salaries for 2025-26. More guides for the rapidly approaching new tax year will follow in the coming weeks, so keep checking back.

More news, cases and updates below.

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Quick News

Online filing service for companies to close
HMRC and Companies House have announced that from 31 March 2026, the joint online filing service used to submit company accounts and Corporation Tax returns will close.

Consultation on APR and BPR reforms for trusts
HMRC have launched a consultation ‘Reforms to Inheritance Tax agricultural property relief and business property relief: application in relation to trusts’. This explores the technical application of the proposed Inheritance Tax (IHT) changes, announced at the 2024 Autumn Statement, in the context of trusts.

Umbrella company non-compliance consultation outcome
The Government has published its response to the consultation 'Tackling non-compliance in the umbrella company market'. From April 2026, recruitment agencies will be responsible for PAYE, instead of umbrella companies. The Employment Rights Bill will also be amended to bring umbrella companies within the definition of employment business to ensure workers receive similar rights to those of direct employees.

Consultation outcomes on Make Work Pay policy
The government has published its responses to four consultations regarding its initiative on labour market reform, 'Make Work Pay'. It plans on strengthening union and workers’ rights in areas like zero-hour contracts, unfair dismissal and sick pay.

Tax Cases

No Multiple Dwellings Relief (MDR) for annexe
In Fitzgerald & Anor v HMRC [2025] TC09415, the First Tier Tribunal (FTT) ruled that Multiple Dwellings Relief (MDR) was not available for an annexe. The planning permission specified that it could only be used for ancillary purposes to the house and it was not a separate unit of residential accommodation.

Editor's Choice

Tax Planning for the 2024/25 year-end: Private Clients
NEW: This is our 2024-25 year-end and new tax year checklist and toolkit for private clients.

Tax Planning for the 2024/25 year-end: Business Owners
NEW: A checklist of key deadlines and topical issues to consider for SMEs and their owners when planning around the end of the 2024-25 tax year. What returns and claims are due before the end of the tax year?

Salary 2025/26 (interaction with NICs)
NEW: Is it still tax-efficient to pay a very low salary? Is it beneficial to pay a slightly higher salary to claim the Employment Allowance? What if the Employment Allowance is not available?

We're hiring: you looking? Tax Adviser/Consultant
We are recruiting for a Tax Adviser to come and join our friendly team at 20:20 Innovation and work in the Virtual Tax Partner (VtaxP) advisory service and on rossmartin.co.uk.

Guides & Updates

Self-employed

MTD: Toolkit for accountants
UPDATE: What is the current timetable for Making Tax Digital (MTD)? When will MTD for Income Tax become mandatory? How will it work? Which clients will be excluded? What planning needs to be undertaken?

Making Tax Digital: Planner & Timeline
UPDATE: When does Making Tax Digital (MTD) apply? What does MTD really mean? How will it affect you?

Directors & Companies

R&D Zone: State Aid and subsidised expenditure
UPDATE: Following the decisions in Collins Construction Limited (CCL) v HMRC [2024] TC09332 and Stage One Creative Services Limited v HMRC [2024] TC09358, HMRC has updated its guidance on what constitutes subsidised expenditure.

R&D: Contracting out R&D & Externally Provided Workers (EPW)
UPDATE: What is contracting out R&D? When does contracted-out R&D qualify for relief? Who can claim the relief? When do externally provided worker costs qualify for relief? What are the special rules applying to Northern Ireland companies?

Capital Allowances

Full expensing & First Year Allowances
What is full expensing? When does it apply and what is the rate of allowance? How are disposals of full expensing assets dealt with? What assets qualify for the 50% First Year Allowance (FYA)? How do I deal with disposals of 50% FYA assets? How do I make a claim?

Short-life assets
What is a short-life asset? How to plan for short-life assets, what can be included and what are the exceptions?

Overseas & Residence

SRT: Split Year Treatment
What is Split Year Treatment? When does it apply?

Non-Domicile: Rules from 5 April 2025
What are the changes to the 'non-dom' regime? What does this mean for non-doms currently using the remittance basis? How will Income Tax, Capital Gains Tax and Inheritance Tax be affected by the changes?

Private Client & Estate Planning

NICs Top Ups: National Insurance Contributions
UPDATE: Topping up NICs: under a special concession, the government is allowing taxpayers to go back to 2006-07, but this facility ends on 5 April 2025.

Adviser Briefing: Changes to BPR (Autumn Budget 2024)
UPDATE: Significant changes to Business Property Relief (BPR) were announced at the 2024 Autumn Budget. What is changing and what might the impact be?

Adviser Briefing: Changes to APR (Autumn Budget 2024)
UPDATE: Significant changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) were announced in the 2024 Autumn Budget. This guide considers the changes in relation to farming. What is changing and what might the impact be?

Tax Return questionnaire
UPDATE: What information is needed to complete a Self Assessment Tax Return? This questionnaire will help you gather the documents and information required.

Investigations & Enquiries

Home Loan Scheme
UPDATE: What are Home Loan Schemes (HLS)? What is HMRC's position on HLS? Do the ‘Gift With Reservation’ (GWR) provisions apply? Does the Pre-Owned Assets Tax (POAT) apply?

VAT News & Cases

Registering for VAT
When should a business register for and charge VAT? What are the VAT registration thresholds? What penalties might HMRC issue for late notification of registration? When do you need to file a VAT return?

Goods or services for VAT
What are goods and what are services for VAT? The answer may have an impact on the time of supply, the place of supply and in some cases the rate of the supply. The answer is not always as straightforward as it may seem.

Tax Tools & Calculators

Tax tools & calculators
We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes.

Calendar of tax deadlines and new tax measures
UPDATE: This is a freeview 'At a glance' rolling calendar of common recurring tax deadlines, new tax measures and other tax-significant events.

CPD

CPD for lunch: Byte-sized chunks of lunchtime CPD (free for our Subscribers)

CPD: Pay as you go:

How to run the most tax-efficient business 2024/25.
Purchase of Own Shares: all the details.
Anti-money Laundering Update and Firm-Wide Risk Assessment ...More...

Tax Queries?

UK Agent for registration of Overseas Entities
Do you require assistance in the registration and verification of an overseas entity that owns UK land or property?

Virtual Tax Partner© Support
Have a tax query? Need a second option? Open a ticket and ask a question. A team of tax experts with a wide range of expertise: covering direct and indirect tax, as well as accounting, R&D claims, reorganisations and much more.

Missed the Last Tax Update?

Ross Martin Tax: SME Tax News 27 February 2025

Agent Update: February 2025
Advisory fuel rates from 1 March 2025
HMRC target online sellers
Home loan scheme was effective for IHT
Employers What's On: 2024/25 NEW
What is the 2025/26 PAYE tax code? NEW
Partial exemption & input VAT UPDATE
Non-Domicile: Rules from 5 April 2025 UPDATE
Creative Industries: Audio-Visual Expenditure Credit & Video Games Expenditure Credit UPDATE
Salaried members: When is a partner taxed as an employee? UPDATE ...More

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